Residential security market worth $1.7 billion by 2019

The residential security equipment market is projected to reach $1.7 billion by 2019, according to the IHS report titled "Residential Security & Convergence in the Smart Home". This would be a CAGR of 7.1 percent over four years, increasing from $1.3 billion in 2015.

IHS includes traditional, "connected" and smart home security markets in the forecast. Smart home security is expected to grow faster than the other sub markets, though, with a 50 percent CAGR over the said four-year period.

The report notes that standards have started to become more open thanks to Z-Wave and ZigBee, among others. Both have been widely adopted by small China smart home device manufacturers and have allowed companies to compete more on the product level rather than the solution level. There's a catch, though. This could lead to giving an edge to established brands like Google and Apple. Startup equipment manufacturers may be able to piggyback on this brand recognition by gaining support from larger companies or possibly adding support to their devices like third-party smart home products that can interact with Google's Nest products.

IHS expects brands with smart home ecosystems will be strengthened over time as people add to their smart home with ad hoc purchases. This will increase interactions with the ecosystem, making users less likely to cancel their subscriptions. Reinforcing this conclusion, ABI Research found that recurring services make up 20 percent of smart home revenues, and that share will rise to 25 percent by 2020.

The opportunity for China manufacturers is in continued support for open standards like Z-Wave and ZigBee which account for nearly 40 percent of the market in terms of supported radio frequencies in residential security equipment.

Looking for other popular standards and ecosystems to support is also beneficial. Many smart home product makers have learned that compatibility with many standards is currently the best way to bet on the future. Nest is one of the most popular options for third-party support. Its first mover advantage came from producing a smart thermostat, which in turn led to an acquisition by Google. However, many big brands are now involved in the fight for the smart home.

See a comparison table of selected home automation system suppliers on GlobalSources.com